Two Chinese Exchanges Help Themselves to User Funds

Huobi and OKCoin have been investing client’s funds in high risk options for their own gain.

It has come to light that two of China’s largest Bitcoin exchanges, Huobi and OKCoin, have been using idle client funds to make investments in “wealth management products“ which are often high-yielding and risky.

Collectively over one billion yuan ($150 million) of client funds was used without permission,, state newswire Xinhua reported.

Murky details

There were no details in the report about the financial products Huobi and OKCoin invested in using those client funds and Huobi declined to comment. A representative for OKCoin didn’t respond to a request for comment either.

The common practice among US and European exchanges is that the finds that are accumulated by the exchanges are simply held, rather than used. Anything other than that means that the exchange is essentially operating a fractional reserve.